Business

Shareholders Funds To Drive Sale Of Rescued Banks

Published

14 years ago

August 6, 2010

Sanusi Lamido, governor, CBN worried by the negative perception occasioned by the delay in disposing of the rescued banks, the Central Bank of Nigeria (CBN) is proposing that the Asset Management Corporation of Nigeria (AMCON) will focus initially on purchasing qualifying non-performing loans (NPLs) along with the associated rights to underlying collaterals, when it becomes operational.

Consequently, the apex bank, which has embarked on reconciliatory moves of late to stir dwindling confidence and also carry major stakeholders along in its ongoing reform programme, would want AMCON to concentrate on margin loans given by banks badly hit by the capital market crash, as they are easier to value. Specifically, the development is expected to restore Negative Asset Value (NAV) – bank’s total assets minus total liabilities – through taking over of the bad loans by AMCON, so as to be able to report positive shareholders’ fund. Shareholders’ fund is capital invested in a business by its shareholders, including retained profits or part of a bank’s financial assets consisting of share capital and retained earnings. It is an alternative term for owners’ equity.

The implication is that investors, both local and foreign, will be encouraged to resume talks with CBN-appointed holding managers of the rescued banks which broke down due to fresh discoveries after the due diligence carried out by some of them on the embattled banks. Ultimately, these investors will be expected to contend with the minimum capitalisation, when the problem of shareholders’ funds is solved by the corporation.

In fact, in the wake of the capital market boom in 2008, the banks dipped into shareholders’ funds to purchase, under fictitious names and proxies, shares under the much abused margin loans. But banks, particularly the rescued ones, are not helping matters as they are still charging interest on some margin loans entered in their books as bad, and which AMCON is expected to purchase.

For instance, an acceptance of the letter of resignation from one of the distressed banks to an ex-staff says: “Kindly note that your public offer loan is running at 16.0 percent beginning from your resignation date.” In another instance, dividends that accrued to the shares of the same loan have been taken over by the bank through letters dated September, November and December 2009 from the registrars to the head office of the bank.

However, CBN is said to be disturbed by the delay in the disposal of the distressed banks through mergers and acquisitions, but observed that the only way to reverse the trend is through positive shareholders’ funds.

Interestingly, AMCON is also expected to distribute those assets to investment managers, who will have the option of taking a variety of portfolios through an investment strategy that will be defined by it. This could be through selling some of the shares and going into real estate. Besides, CBN sees it as a vehicle for distributing losses between the banks and the brokers, following the capital market loss of about 70 percent to the crisis.

Justifying CBN’s position, Razia Khan, global head of macro economic research, Standard Chattered Bank said: “In the case of any asset management company, one would expect it to buy assets that can be easily valued first – in this case margin loans – as there is a market for it. Even if higher than market prices are paid for the assets in order to recapitalise the institutions, this is standard practice with AMCs the world over.”

Johnson Chukwu, managing director and chief executive officer, Cowry Asset Management Limited, said: “What the CBN means is that AMCON will basically start with taking over the bad loans of the troubled banks and the collaterals which were used to secure the loans. This action is intended to make sure that their net asset value, which, for the troubled banks is all negative, will be reversed to positive. As you know, the NAV, which is the same thing as the shareholders’ funds is negative for the troubled banks because they had to take losses from their non-performing loans.

”When these loans are taken over by AMCON, the banks will write back the huge provisions they made for the loans into profit or extraordinary income and if the write backs are as high as their negative NAV, they will be able to report positive shareholders’ fund. For the banks to be attractive to new investors, be they local or foreign, they need to have positive shareholders’ funds.

“For instance, if an investor has to take over bank A today, he has to first inject over N200 billion to bring its shareholders’ fund to positive before injecting another N25 billion to meet the minimum capitalisation for banks. If, however, AMCON is able to reverse the negative shareholders’ fund, then the new investor will only have to contend with raising N25 billion.”

Akinbamidele Akintola, research analyst, Renaissance Group, was of the opinion that given the 10-year life span for AMCON, it will be in a position to manage the loans for recovery, post-capital injection, adding that “it would remain a part of CBN regulatory infrastructure going forward to reduce NPL levels in banks.” He however called for a clear and transparent valuation model for taking over the loans.

Business

Fuel Scarcity: IPMAN threatens shutdown over bridging claims

Published

4 days ago

May 3, 2024

The Tide

The Independent Petroleum Marketers Association of Nigeria (IPMAN) Depot Chairmen Forum, has exonerated its members from the current fuel scarcity in the country.

According to IPMAN, this is caused by its inability to source petroleum products.

The IPMAN Depot Chairmen Forum also threatened to withdraw its services over non-payment of N200 billion bridging claims by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to its members, since 2022.

Alhaji Yahaya Alhassan, the Chairman, of the Forum said this while briefing newsmen in Abuja, yesterday.

Alhassan said the Nigerian National Petroleum Company Limited (NNPC Ltd.) was the sole importer of the product, but the marketers could not source products from NNPC Ltd. deport, rather from the private depots at high rate.

“We cannot buy fuel from the private depots at N950 and transport the product from Lagos to the North and other parts of the country with N2 million and still sell it at N900 or N1, 000.

“It is expedient for us to state that we are more pained by the non-availability of petroleum products in the country, which has given rise to another round of untold hardship for Nigerians.

“Contrary to claims that IPMAN members are hoarding Premium Motor Spirit (PMS) known as fuel, we would like to categorically state that PMS scarcity is wholly triggered by inability to get fuel from NNPC and not IPMAN,’’ he said.

Meanwhile, the NNPC Ltd. Chief Corporate Communications Officer, Olufemi Soneye said the disruption was due to logistical issues which had since been resolved.

“We currently have an availability of products exceeding 1.5 billion litres, which can last for at least 30 days. Unfortunately, we experienced a three-day disruption in distribution due to logistical issues, which has since been resolved.

“However, as you know, overcoming such disruptions typically requires double the amount of time to return to normal operations.

“Some folks are taking advantage of this situation to maximise profits. Thankfully, product scarcity has been minimal lately, but these folks might be exploiting the situation for unwarranted gain,’’ Soneye said.

He however, said the lines would clear out soon.

On the non-payment of bridging claims, the IPMAN forum said it was distressed and depressed by the laidback attitude of the NMDPRA towards the survival its member’s businesses, arising from its refusal in paying the claims.

“It is with deep frustration that we have assembled here today as the IPMAN Depot Chairmen Forum. It is also disheartening to note that some of our members have completely shut down businesses and retrenched employees.

“As businessmen and women, our members acquired bank loans to keep their fuel retail outlets running on a daily basis across the nooks and crannies of Nigeria in order to serve the teeming population of Nigerians,’’ Alhassan said.

He recalled that Sen. Heineken Lokpobiri, Minister of State Petroleum Resources (Oil), at a stakeholders meeting in February mandated the NMDPRA management to clear the entire debt in 40 days.

“However, today, we have crossed the 40 days’ time lapse given to the NMDPRA to clear the debt, and it is shameful to state that only the paltry sum of N13 billion has been paid, ignoring minister’s directive.

“We are not happy with the indiscriminate increment in the issuance and renewal of Sales and Storage Licence, by the NMDPRA, and the subsequent delays in acquiring the licence, which our members are recently subjected to.

“We are also calling on President Bola Tinubu to look into this unwholesome figure which is highly detrimental to our business and reverse it forthwith, as it is bound to impact negatively on the masses.

“We are poised to take far reaching decisions that may cripple the supply and sales of petroleum products across Nigeria if our demands are not met within the shortest period of time.

“We are collectively prepared to withdraw our services, shut down every single outlet, and suspend lifting of products forthwith till our demands are fully met, and the consequences will be terrible.

“We call on our members to however remain resolute and law abiding, even as we draw close to the immediate ultimatum for our demands to be met by the NMDPRA,’’ the chairman said.

Reacting to the IPMAN’s claims, the Acting Head, Corporate Communications, NMDPRA, Seiyefa Osanebi said the bridging claims payment was ongoing.

“The bridging claims payment is always an ongoing process,” she said.

Maritime

Shippers’ Council Registers 160 Port Operators

Published

1 week ago

April 29, 2024

The Tide

The Nigerian Shippers Council (NSC) says it has registered 160 Port stakeholders into its Regulated Port Service Provider and Users platform since the initiative began in 2023.
Executive Secretary, NSC, Mr Pius Akutah, made the disclosure on the sideline of a sensitisation programme by the commission for port operators in Lagos, with the theme, “Regulated Port Service Provider and Users”.
Represented by the Director, Consumer Affairs, Chief Cajetan Agu, Akutah emphasised the significance of the programme for stakeholders.
He said the sensitisation programme was the second edition after its commencement during the last quarter of 2023.
The Secretary said the 160 registered port operators consist of agencies, terminal operators, shipping companies, individual port users as well as service providers.
“We invited the ports stakeholders for enlightening them on the processes for online registration of Regulated Port Service Provider and Users.
“We have demonstrated to them how to register and how to make payment and we were able to present before them the various categories of the registration.
“The rate of payment is also in the registration. The payment of each group depends on the operation. A shipper pays N30,000, terminal operators and shipping companies pay N300,000, truckers also pay N30,000, while some pay N50,000 and N100,000.
“The Council was able to intimate them on the benefits, because port users benefit more as we help to interface on reducing port charges from time to time”, Akutah said.
He said that there was a need to continue to work with port operators to stop delays and eliminate high costs to make the port efficient.
Also speaking, the Deputy Director, Stakeholders, Service, NSC, Mr Celestine Akujobi, said “the sensitisation exercise was important for the council to enable us bring all the port stakeholders together”.
According to him, this is to avoid challenges during the implementation of the council’s responsibilities.
“By the time we introduce sanctions on defaulters, no operators will complain that he or she is not aware of the registration.
“I’m happy with the turnout of this sensitisation. This shows that the operators are well informed of the statutory friction of the council as the port regulator.
“The final implementation will commence as soon as we discover that all the operators have keyed into the portal.
“We are engaging other ports across the country and we’re hopeful that before the last quater of 2024, the council will implement sanctions on defaulting operators”, Akujobi said.
Earlier, Vice Chairman, National Association of Government Approved Freight Forwards (NAGAFF), Dr Ifeanyi Emoh, said port challenges were enormous, adding that they originated from some of the government agencies.

Emoh urged the council to look into regulating other government agencies, so that there could be a window through which they can collect port charges collectively instead of indiscriminately.

By: Chinedu Wosu